According to the Los Angeles Times, Governor Jerry Brown is “leaning against” a proposed deal to bring an estimated 7,000 Amazon.com jobs to California. The Governor is concerned that a deal would somehow cost the state revenue.

If the Governor truly believes the ‘Amazon Tax’ is going to generate millions in revenue for the state this year, he’s mistaken. Board of Equalization staff have determined that the projected $200 million in revenue will not materialize this year.

As of today we’re not aware of a single online retailer that has registered with BOE to collect sales tax because of AB 28X. According to Board of Equalization staff, the number of out-of-state registrations in July 2011 was actually lower than July 2010.

Additionally, should a referendum qualify for the ballot, the law would be suspended until a vote of the people in June or November of next year. That would mean the ‘Amazon Tax’ would be a guaranteed money loser this fiscal year, since terminated affiliates will pay… Read More

As reported by the Los Angeles Times, a new study provides even more bad news for California’s job creation prospects and overall budget picture. According to Economic Modeling Specialists, Inc., California has fallen from first in the nation for new business formations to a dismal rank of 50th.

According to the report’s authors:

California’s economic woes and instability have been well-documented, and this data makes another case for how bad things have gotten there. California had the most net new business establishments in 2009 (more than 12,500) and 2008 (32,000-plus); in fact, it ranked either first or second from 2001 to 2009. But the Golden State sank all the way to 50th in 2010 with more than 4,600 fewer new establishments than the previous year.

Could it be that California’s business climate has become so hostile that entrepreneurs now feel they mustleave the state in order to successfully launch a new business endeavor? This news should be a wake-up call to Governor Brown and the Legislature.… Read More

Although I continue to remain deeply concerned about California’s economic recovery, I’m pleased to report that our state’s budget picture—at least when it comes to sales tax—isn’t quite as bleak as it might seem.

On Tuesday, the State Controller reported that sales and use tax general fund revenues for the month of July were $977.6 million, 12.5% below the Department of Finance projection of $1.12 billion.

However, BOE actually received $1.64 billion in July, more than half a billion dollars above the budget projection cited by the Controller.

The competing revenue numbers are the result of two different methods of accounting. As required by statute, the Controller looks at “money in the bank,” which does not include pending deposits. BOE numbers reflect “money in the door,” which includes all payments—including those received but not yet deposited.

The last few days of July saw more than $600 million in sales tax revenue received by BOE. These dollars were not included in the Controller’s report because they had not yet been deposited into state coffers. Retail… Read More

It’s not every day a government program becomes less burdensome for small business owners and entrepreneurs, but it can happen.

In my recent op-ed “A Qualified Mess,” I described the many problems plaguing the “Qualified Purchaser Program” — a use tax collection program targeting small business owners. I invited impacted business owners to send me their feedback via a survey on my website, and I shared this feedback with my colleagues and BOE staff.

I also joined small business owners and taxpayer advocates at a press conference urging reforms to this program. This NFIB-sponsored event was well-attended and led to stories by … Read More

So, you haven’t heard from me in a while. Maybe you thought my computer crashed or I don’t love you anymore. But, neither is true.

The whole debt limit debate and compromise was very tense, very sensitive and very important. Going “over the cliff” was simply unacceptable. As I have explained before, we were never in danger of default. The government was going to pay interest on the debt and could issue new debt to pay off maturing notes. But, it would have required a 50% reduction overnight in non-interest government spending, which would have been very difficult to do. But, more importantly, fear heading towards panic was showing up in markets. That panic would have led to another financial meltdown, maybe not as bad as 2008, but certainly bad enough to plunge the nation and the globe back into deep recession. But, this time it would be completely government-made.

We could not let this happen. But, neither could we just extend the debt limit without showing the markets that we were making progress towards getting these deficits under control. If we did that, the markets would set their own debt limit by not lending us any… Read More

Editorial boards and newspaper columnists are quick to assign “greed” as the motive driving Amazon, eBay and others to oppose a new law aimed at making more out-of-state online retailers collect sales tax on behalf of the State of California. But the greediest actor in this drama isn’t Amazon —- it’s the government.

You see, online retailers didn’t pick this fight. State lawmakers did —- out of misguided lust for revenue they’ll never see.

Put aside the rhetoric and consider the facts. Under the U.S. Constitution, state lawmakers can’t compel out-of-state retailers to collect sales tax unless those retailers have a physical retail presence —- known as “nexus” —- in our state. Californians are supposed to pay use tax —- the equivalent of sales tax —- on out-of-state purchases, but few do.

It works the same way in reverse. California businesses making out-of-state sales in states where they have no brick-and-mortar retail presence don’t have to register with the tax bureaucracies in those states, collect and remit sales tax or be subject to audits. In five states where Amazon collects and remits sales tax, many California… Read More

Just the Facts, Ma’am: This was the famous retort offered by fictional LA police detective, Sergeant Joe Friday, on the TV show Dragnet whenever a female witness started to delve into conjecture or opinion. In these missives, I usually give you heavy doses of my commentary and opinion.

Not today, or tomorrow. As the debt limit debate reaches the critical stage, I felt maybe you needed some facts, just plain facts, about the country’s financial status. Last week in a Budget Committee hearing, the actuaries for the Social Security and Medicare systems testified as to the status of these two programs and provided actuarial projections for both. Here is a summary of the salient points they made. I will let you draw your own conclusions:

Social Security and Medicare currently amount to 35% of all federal spending. Both systems are currently in negative cash flow and are on track for insolvency or exhaustion of their trust funds. The reasons for these impending problems are largely demographic. The United States traditionally had a birth rate of about 3 children per woman up until 1965. By 1975, that rate had dropped to 2 children per… Read More

California taxpayers are celebrating a rare victory. Despite Democrat efforts to extend them, the sweeping “temporary” tax increases of 2009 have gone away. This is an uncommon treat, as many prior tax hikes sold as “temporary” are still with us today.

As Californians enjoy the benefits of this victory, today marks the 20th anniversary of a prior sales tax increase that is still with us. On July 15, 1991 Californians were impaled with a “temporary” sales tax increase of 1.25%. This measure was enacted by the Legislature to address the state budget shortfall during the early 1990s economic downturn.

Fast forward to June of this year. A 2009 sales tax rate increase of 1% was set to expire on July 1, 2011. Despite a vote of the people against extending this and other temporary tax increases, Governor Jerry Brown and Democrat legislators unsuccessfully sought a five year extension of these taxes.

These higher taxes amounted to billions of dollars per year out of the pockets of struggling Californians and into the hands of wasteful government. Combine the 2009 temporary sales tax increase with the 1991 temporary sales tax increase, and… Read More